Government may rejig duties on medical devices to help 'make in India'

The government is considering duty revision to make expensive medical devices such as stents, catheters and knee joints available locally at lower prices.Sushmi Dey | TNN | September 25, 2015, 11:50 IST

NEW DELHI: The government is considering duty revision to make expensive medical devices such as stents, catheters and knee joints available locally at lower prices.

The department of pharmaceuticals has proposed to change the customs duty structure applicable on imported medical devices and their raw materials. The idea is to promote manufacturing of medical devices in India, so that they are available at a reasonable price.

At present, companies have to pay a total of around 15 per cent duty on import of finished medical devices, whereas raw material used to manufacture such devices attracts 27 per cent taxes. This has become a major deterrent for multinationals as well as domestic players to manufacture finished products in India, despite the government opening up 100 per cent foreign direct investment (FDI) through automatic route for medical device manufacturing.

According to an official source, DoP has floated an inter-ministerial note proposing to bring down the duty on raw material used in making medical devices.

In December, the government eased norms for the sector and created a special carve-out in the existing FDI policy for the pharmaceutical sector to encourage investments in domestic manufacturing. Investments in the sector were also exempted from caveats such as 'non-compete clause', which is applicable for FDI in existing drug manufacturing units.

Though initially major players such as Philips, Siemens and GE showed interest in ramping up investments in manufacturing domestically, soon many projects were either in limbo or delayed.

"There is a clear policy anomaly, which requires immediate correction. The government must provide domestic manufacturing a level playing field. If importing products is more viable then why would any company invest in setting up a factory and manufacture it here," asked Himanshu Baid, managing director, Poly Medicure.

"Duty correction will not only promote domestic manufacturing but is also expected to bring down prices of medical devices, which are currently only available through imports," the official said.

Almost 80 per cent of the medical devices used in India are currently imported. Most of these are critical devices which require high-end raw material and technology.

While some departments in the government including the health ministry have strongly supported extending the drug price regulation to medical devices, several others have opposed the move saying reduced margins may impact availability of products. There are also contentions that price regulation at a nascent stage may also create hindrance for further investments in the sector.

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